For foreigners in Bali, leasehold is often the preferred choice for investing in property. As an alternative to full ownership or freehold title, which is still restricted by regulations, leasehold is considered more advantageous for foreigners than ownership through nominee arrangements, which often lead to legal issues in the future. Is leasehold really the best option?
Leasehold Title as Secure and Legal Option
Providing a secure and legal means to invest in the Balinese real estate market, leasehold title grants foreigners exclusive rights to use and develop the property for a specified period. Typically 25-30 years, with extensions possible for another 25-30 years. Leasehold title might not give you direct ownership of the property itself, but what you really care about is making your money back within a reasonable timeframe.
In Bali where the rental property has higher occupancy rate than any other provinces in Indonesia, an investment in leasehold title can get you a nicer property in a better area that rents for more. This higher rent allows you to recover your investment in 10-11 years and enjoy pure profit (minus costs) for the rest of the lease, with the possibility of extending it later. That is enough time to get your initial investment back and also enough time to make a solid profit.
Two Sides of Leasehold Title in Bali
For foreign investors in the property business, navigating the real estate market can be complicated. Freehold ownership offers complete control, but it comes with extra process like establishing a local company in Indonesia.
This is where leasehold ownership comes as another interesting option offering a simpler, faster, and more accessible path. However, it’s important to understand both the advantages and disadvantages of leasehold properties in Indonesia before making a decision.
Advantages of Leasehold Ownership in Indonesia:
- Simpler and Faster: Setting up a leasehold agreement is generally quicker and easier than establishing a foreign-owned company (PT PMA) required for freehold ownership.
- Lower Costs: There are no ongoing fees associated with holding a leasehold property compared to the maintenance costs of a PT PMA.
- Accessibility: Leasehold properties are readily available to foreigners, eliminating the need for complex legal structures.
However, there are also some considerations to keep in mind:
- Limited Ownership: You don’t own the land itself, only the right to use it for a certain period (typically 25-70 years with extensions possible).
- Renewal Challenges: Renewing the lease can be expensive and uncertain, potentially depending on the property’s value.
If you want to see the samples, below are curated leasehold villas available in Bali that offer a range of styles and locations to perfectly suit your taste and budget. Let’s take a look to find out whether one of this listing is your ideal Balinese sanctuary.
This sleek 2-bedroom villa offers a tranquil escape, just a short ride from the vibrant Umalas, Berawa, and Seminyak. Fully furnished for your convenience and offered with a 24-year leasehold title for only IDR 2 billion. This villa is perfect for those seeking a low-maintenance haven. The minimalist decor in the living room, bedrooms, and dining area creates a calming ambiance for comfort, relaxation and intimacy. Click here if you want to see more about this property.
This modern 3-bedroom villa, built in 2021, offers a tranquil escape on the edge of a river in Tabanan. Unwind by the long swimming pool overlooking the beautiful scenery. The open-concept Western-style kitchen allows for seamless entertaining. Offered with a leasehold title valid until February 2041 for Rp 4.4 billion (USD 280,000), or explore the option to rent for IDR 560,000,000 per year. Learn more here.
This mansion just recently finished in 2024, sits on a spacious 1180 sqm plot. It boasts a leasehold title valid until 2064 with a guaranteed 30-year extension. Spread over three luxurious floors, the property features a spa center, a rooftop plunge pool with an entertainment deck and barbecue area, perfect for indulging in tropical bliss. Located within a secure gated community with a 6-meter access road, electric gate, and 24-hour security. Pricing is available upon request, but you can explore more details and photos here.
Leasehold Title vs Freehold Ownership
While leasehold offers a simpler path to property ownership in Indonesia, freehold ownership through a PT PMA (foreign-owned company) might be a better choice in specific situations. Particularly if you prefer complete ownership and plan to hold the property for a long time.
Additionally, if you intend to rent out the property, a PT PMA provides a legal business entity for commercial activities. However before making decision whether to choose leasehold or freehold, consider these factors:
— Investment landscape: For short-term investments, leasehold might be sufficient. However, for long-term plans, freehold offers greater security as you’ll own the land itself, not just the right to use it.
— Exit strategy: Think about the ease of selling or transferring the property when the time comes. Leasehold renewals can be unpredictable, while freehold allows for a more straightforward exit.
— Budget: Factor in the initial costs of setting up a lease or PT PMA, as well as ongoing maintenance fees associated with each option.
Expert Guidance from Seven Stones Indonesia
To make an informed decision, consulting with a qualified real estate consultant like Seven Stones Indonesia is highly recommended. Our professional team can provide you expert guidance to understand the specific legal issues and choose the ownership structure that best suits your needs.
Fire away your questions about property business to our WhatsApp +62 877-7711-7701, email at hello@sevenstonesindonesia.com , or simply just fill in our contact form below. Contact us today and let’s start your investment journey now with Seven Stones Indonesia.